Environment editor, The Age

Axing our 20% renewable energy target will lead to ... $22 a year savings for households to 2017-18, $50 a year cost to households by 2020, $11b less in investments in renewable energy projects and 34.7m tonnes more greenhouse gas emissions by 2019-20. SOURCE: ROAM CONSULTING, CLEAN ENERGY COUNCIL Photo: Graham Tidy

Axing Australia’s renewable-energy target – currently under review by the Abbott government – would halt $11 billion in future investments and mean higher household power bills by decade’s end, new modelling has found.

The modelling, commissioned by the Clean Energy Council, which represents the renewables industry, finds power bills are higher in the short term because of the target, but households would end up about $50 a year better off in 2020 if the target is left in place.

The work is part of the industry's pitch to protect the renewable-energy target, under which at least 20 per cent of Australia’s electricity will come from renewable sources by 2020.

The Abbott government has commissioned a review of the target, headed by senior business figure Dick Warburton, who is sceptical of the science underpinning human-caused climate change.

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Prime Minister Tony Abbott has previously declared that he wants Australia to be the ''affordable energy capital of the world'', but he said the way the target was working at the moment was putting upwards pressure on power prices.

The modelling was carried out by consultants ROAM, who studied what would happen if the target were discontinued or left to run as planned. It did not look at reducing the target to account for falling electricity demand, as proposed by some major energy companies.

The report concludes that having the target in place means average household power bills would be $11 to $22 a year higher until 2017-18 than if no more renewable-energy projects were built under the scheme.

But the modelling finds that if the target is left in place then at the end of the decade, the boost to renewable-energy facilities would displace the need to use more gas power as growing energy demand returns, keeping wholesale power prices low. The report says that as a result, average household power bills would be $51 lower in 2020 than if the target was axed, and an average of $100 a year lower after 2020.

The report also says that if the renewable energy target was repealed, $11 billion in new investments would not go ahead – and Australia’s cumulative greenhouse gas emissions would be 34.7 million tonnes higher by 2020.

Energy players are concerned that because electricity demand is falling in Australia, the renewable target will be overshot. Previous studies have found that it could mean 27 per cent of electricity could come from renewable sources by 2020, but the Clean Energy Council's modelling finds a smaller overshoot of 22.6 per cent.

The council's policy manager, Russell Marsh, said it hoped the modelling would educate the government and reviewers that the renewable energy target ''brings a lot of benefit to Australia''.

Matthew Warren, the chief executive of the Energy Supply Association of Australia – which represents large fossil-fuel power generators – rejected the notion that building more expensive renewable-energy sources would make electricity cheaper, and said that artificially suppressing wholesale prices was unsustainable for the market.